I agree completely with the OP. That's one of the reasons why we made so many bad trades, such as the Jamal Adams trade, because Pete was in denial, kept thinking that he was one or two players away from a championship when the reality was that he needed to blow up the team and start over.
I'm no psychiatrist, but I do think that part of Pete's problem is his mottos, ie "win forever." He lives and breathes it. He can't handle the fact that 95% of most teams are going to wax and wane, so he denies that his team is mediocre at best, keeps thinking that if he can just catch a break here or there, that he'll be hoisting another Lombardi.
The other thing might be age related. Pete's 74 years old, and I'm just 3 years younger than he is so I think I can speak with some degree of credibility on the issue. Some people my age are afraid to retire, that it's a signal that death is approaching.
I can remember Bobby Bowden, legendary FSU coach answering questions about his working well past normal retirement saying: "When you retire, there's just one more big event left in your life, and I'm not looking forward to that."
The other part of Pete's problem is that Pete's too loyal to former players and family members. It's why he traded for Geno, brought back a failed safety in Jamal Adams, hired two of his sons on his coaching staff.
I'll always be grateful to Pete for giving us the best period of Seahawk football in franchise history. But his best days are clearly in the rear-view mirror. If he gets fired from this job, he will have been fired in all 4 of his NFL head coaching jobs.